MOB Report Mid Year 2010 Investments Trends

The Mid Year 2010 REAL Capital Report on Medical Office Buildings indicates positive changes for investors of healthcare real estate. The national average price per square foot for Medical Office Buildings (MOB) has risen by $13.00 per square foot to over $224.40 per square foot over year end 2009. However, prices are still well below the historical highs of over $275.00 per square foot in 2007. As comparison the Southeast average is $177.00 per square foot with highest being $323.00 per square foot in the West Region. There is no data recorded for the Atlanta MOB market.

MOB Report Year End 2009 Investment Trends

The Fourth Quarter 2009 REAL Capital Report on Medical Office Buildings reveals some interesting trends and backs up what has been reported for the past year.  For 2009 verses 2008 Medical Office Building (MOB) sales volume declined by 63%.  The average price per square foot was down by -6% however by some measurements up by 9%.  This compares to traditional office properties which were down by -71% in sales volume and down by a massive -26% in average prices per square foot.  The percent asking price to achieved price was approximately 89% for both type properties.

MOB Sale Volume Increases in 3Q 2009

Metro Atlanta - Sale of medical office building portfolio doubles total yearly volume in 3Q 2009.   The recent sale of Johns Creek I, II and III totaling 72,331 square feet in 8 buildings for $7.7 million pushed total dollar volume for 3Q 2009 to $11.6 million.  This represents an increase over the 1Q and 2Q 2009 combined total volume of $5.0 million.  The average price per square foot for these MOB sales declined from $172.29 per square foot in 1Q 2009 and $108.57 per square foot in 2Q 2009 to $91.74 per square foot in 3Q 2009.   At the time of sale the Johns Creek portfolio was only 45% occupied which lowered the overall price by approximately $2.0 million below asking price.  Both building replacement cost and CAP rates at 95% occupancy support the asking price.  With current market activity, expect dollar volume to remain strong and sales prices to be in the range of $150.00 to $175.00 per square foot for both smaller investment grade and owner/user MOBs through 4Q 2009.